Are you in the 1% or closer to the 99%?
We all like to compare ourselves to other people. It’s unavoidable and happens in every industry, fashion, fitness, and yes, even finances.
One of the best ways to find out where you stand financially in comparison to your peers is with your income percentile. Your income is a good indicator of how much you can save, invest, and spend on enjoying your life.
You should use your income percentile as a benchmark to let you know if you should start trying to earn more money or keep doing what you’re doing.
What even is an income percentile
You may be familiar with percentiles from your high school math classes or from your standardized test scores. If not, here’s a quick primer.
According to Wikipedia, “a percentile (or a centile) is a measure used in statistics indicating the value below which a given percentage of observations in a group of observations fall.”
A simpler explanation is that a percentile is a number where a certain percentage of what is being measured falls below that number.
For example, if your income is at the 75th percentile, that means you make more money than 75% of the population. Not bad at all.
How to calculate your income percentile
There are many different ways to measure your income percentile. You can measure your income percentile by age, gender, education level, geographic region, etc.
The most common way to measure your income is by age and probably the one that will get you the best comparison with your peers. Here’s a good calculator I found that does just that: Income Percentile By Age Calculator.
The income calculator above is only good for US income percentiles. If you live somewhere other than the US or if you’re curious how you stack up against the world, you can use CNN’s Global Wage Calculator to compare your income percentile globally.
50th income percentile by age
Curious what income you need to be at the 50th percentile of your age group? Meaning the amount of money you need to be average among your peers.
Here’s a table. The data was taken from the Bureau of Labor Statistics for the first quarter of 2018.
16 to 19
20 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65 years and older
How to increase your income percentile?
So now that you know where you stand among your peers, you may want to know how you can increase your income percentile.
There’s really only two ways your income percentile can increase. You can earn more money or a significant amount of other people would have to start earning less.
Since we don’t really have any influence on how much money other people earn, let’s focus on the first part: you earning more money.
To increase your income you can either ask for a raise, switch to a higher-paying job, or build a second income.
I personally believe that building multiple income streams is the best way to increase and diversify your income. If you’re interested in building more than one stream of income you should read the blog post below:
What’s your income percentile? Are you surprised by your number? Let me know in the comments.
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